BUSI 1301: Business Principles - Chapters 1-3 Review

Comprehensive practice flashcards covering basic business concepts, economic systems, international trade, and social responsibility/ethics from BUSI 1301 notes.

How is a 'Business' defined in the lecture notes?

The organization of tasks and functions that will produce a good or service with utility for customers (whomever customers may be) and generates profit.

What are the 6 proven factors of production required for an economy to be successful?

Land, Labor, Capital, Entrepreneurship, Technology, and Knowledge.

How is 'utility' defined in the context of business products?

Primary and secondary uses of products, goods, and services.

What is identified as the most important item within business?

TIME (because you can never get time back).

What is the difference between revenue and profit?

Revenue is the total amount of money a business takes in during a given period by selling goods and services, whereas profit (or margin) is the incoming funds remaining after separating expenses.

How are entrepreneurs defined in the notes?

Individuals who accept business risk in hopes of, typically, rapid financial returns and rapid expansion.

Who qualifies as a 'Stakeholder' in a business?

Anyone involved in, or who holds an interest in, a business (including employees, customers, vendors, investors, and the local community).

What is the distinction between 'Standard of Living' and 'Quality of Life'?

Standard of Living is the amount of goods and services individual people can buy with the money they have or make. Quality of Life is society's overall well-being, including freedoms, access to education, health care, safety, and free-will.

How do Macroeconomics and Microeconomics differ?

Macroeconomics is the study of national economies as a whole, while Microeconomics is the study of particular people or particular markets.

What is Gross Domestic Product (GDP)?

The total value of goods and services produced in a country in a given year.

What are the four foundations of Capitalism listed in the notes?

1) The right to own private property, 2) The right to own a business and keep all generated profits, 3) The right to freedom of competition, and 4) The right to freedom of choice.

What is the Law of Supply?

Producers will offer (supply) more of a product for sale as its price rises and less as its price drops.

What is the Law of Demand?

Buyers (customers) will purchase (demand) more of a product as its price drops and less as its price increases.

How is Socialism defined in the course material?

An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be evenly distributed among the people.

How is Communism defined in the transcript?

An economic and political system in which the state (the government) makes all economic decisions and owns almost all the major factors of production.

What are NAFTA and the WTO, and when did they come into force or get established?

They are multilateral trade agreements. NAFTA (North American Free Trade Agreement) became in-force in January 1994, and the WTO (World Trade Org.) was established in 1995.

What is 'Foreign direct investment'?

The buying of permanent property and businesses in foreign nations.

What is the difference between Absolute Advantage and Comparative Advantage?

Absolute Advantage is the ability to uniquely produce a good or service unlike any other producer in the world or region. Comparative Advantage is the ability to produce a good or service comparably to other producers via a more efficient process or at a better customer price.

What is the difference between a Tariff and an Embargo?

A Tariff is an extra tax levied on some imported goods, whereas an Embargo is a total ban on imports and exports.

How do Licensing and Franchising differ as strategies to reach global customers?

Licensing is issuing rights to produce a product in exchange for a fee. Franchising is a privilege given to a person or business to sell the franchisor's product for a fee.

What distinguishes an International Company from a Multinational Company?

An International Company broadens operations (e.g., manufacturing) abroad while maintaining core operations/sales in its normal environment. A Multinational Company duplicates all aspects of operations (sales, R&D, manufacturing, client building) globally.

What is 'ethnocentricity'?

The belief that your own culture is superior to all other cultures.

What is the definition of Business Ethics?

The standard organizations hold pertaining to their behavior during normal and adverse (crisis) organizational situations.

What are the four stances of ethical and social responsibility from least to most ethical?

1) Obstructionist Stance, 2) Defensive Stance, 3) Accommodative Stance, 4) Proactive Stance.

What characterizes an Obstructionist Stance toward ethics?

Doing as little as possible and potentially attempting to deny or cover up regulatory violations.

How did CEO Lawrence Rawls and Exxon respond to the 1989 Valdez oil spill?

Exxon took an obstructionist and defensive stance, blamed ship personnel, distanced company staff, and fought clean-up costs in court before being ordered to pay over $5\text{B}$ in damages.

What were the facts and executive response of the 1984 Union Carbide Bhopal, India gas leak?

$45\text{ metric tons}$ of MIC (Methyl Isocyanate) gas leaked, killing ~$8,000$ overnight. CEO Warren Anderson acted as an obstructionist by citing patent laws to withhold chemical recipe details and fought lawsuits defensively.

What five main groups act as watchdog entities monitoring corporate ethics and performance?

Socially Conscience Investors, Environmentalists, Union Officials, Customers, and Academics/Researchers (along with Government).

How did Johnson & Johnson handle the 1982-1983 Tylenol cyanide tampering crisis?

They mobilized a crisis plan within $1.5\text{ hours}$, voluntarily recalled $31\text{ million}$ unsold bottles at a loss over $100\text{M}$, and offered up to $2.50$ refunds for open bottles.

How did CEO Ruben Erben respond to the 1991 Luby's Cafeteria Massacre in Killeen, TX?

He arrived at the scene personally, released $100,000$ to cover victims' final expenses, and assured restaurant employees they would remain on the payroll during investigation and rebuilding.